Crude Perks Up as Earnings Roll In

The September crude contract adds 83 cents to $59.94.
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Updated from 12:59 p.m. EDT

Oil prices rose Thursday as traders continued to digest yesterday's inventory data and took stock of the industry's huge second-quarter earnings.

Crude for September closed up 83 cents to $59.94 on Nymex. Gasoline futures were little changed at $1.71 a gallon.

Prices ended slightly lower Wednesday after the Energy Department said U.S. crude inventories fell by 2.3 million barrels last week, while distillates, including heating oil and diesel, rose by 3.1 million barrels. Analysts had been forecasting a 1.7-million-barrel distillates build. Gasoline stocks dropped by 2.1 million barrels.

Lower gasoline inventories coupled with refineries' running at near full tilt supported the bulls, who continue to tout a shortage in refining capacity as a long-term threat to product supply.

Prices were also propped up Thursday by a fire that broke out on an oil rig in India, which killed 12 people and destroyed the 110,000-barrels-a-day facility, which is said to provide about 15% of India's oil supply. Hundreds of employees have been evacuated from the platform.

Noble

(NE) - Get Report

said one of its jackup rigs was involved in the fire. The offshore drilling equipment provider contracted a rig to India's state-owned Oil and Natural Gas Corporation in the Bombay High Field, located about 100 miles off the west coast of India.

Noble reported that two of its employees are unaccounted for and that many details regarding the incident are still unclear. Its shares dropped 1% to $66.88 following the news.

In the U.S., the House passed a final version of an energy bill that provides $14.5 million in tax breaks to domestic energy producers. It's expected to be cleared by the Senate on Friday. The legislation mostly provides tax discounts in the form of royalty relief and subsidies, of which the main beneficiaries are said to be oil and gas producers as well as companies that produce renewable sources of energy.

The bill also gives tax credits to those purchasing hybrid fueled cars, gives $500 million in tax breaks to companies that perform deep-sea drilling in the Gulf of Mexico, and requires oil refiners to double the use of corn-produced ethanol in gasoline to 7.5 billion gallons a year by 2012.

In company earnings news,

Exxon Mobil

(XOM) - Get Report

, the world's No.1 oil producer, posted second-quarter income of $7.6 billion, or $1.20 a share, compared with $5.79 billion, or 88 cents a share, last year. The results were driven by strong earnings from its exploration, refining and retail segments. Adjusted earnings, however, missed analysts' expectations by a penny.

Royal Dutch Shell

(RD)

also missed analysts expectations because of disappointing production, though its second-quarter earnings surged 26% to $4.62 billion thanks to high energy prices. Shell shares declined 0.6%, to $60.35.

Marathon Oil

(MRO) - Get Report

said second quarter earnings jumped 91% from a year ago, as high energy prices and strong refining margins drove gains. Net income was $673 million, or $1.92 a share, while adjusted earnings were $2.16 a share. Both numbers were well ahead of estimates.

"Upstream results were complemented by our downstream operations, which achieved outstanding results through ... favorable crack spreads, sweet/sour differentials and strong wholesale and retail margins," the company said in a release.

Revenue from refining and marketing was $823 million in the second quarter 2005, compared with $577 million in the second quarter of 2004. Profit from exploration and production totaled $776 million, compared with $438 last year. Shares of Marathon rose 1.7% to $58.85.

Among the independent exploration and production companies, Calgary-based

EnCana

(ECA) - Get Report

said second quarter continuing income was $786 million, or 88 cents a share, compared with the year-ago $265 million, or 28 cents a share. Results were driven by a "robust commodity price environment." Earnings came in 6 cents lower than analysts' average estimate.

Shares of

Apache

(APA) - Get Report

, EnCana's peer, fell 1.5% after its second quarter earnings missed estimates. Net income rose, however, to a record $587 million, or $1.76 a share, compared with $382 million or $1.16 a share, a year ago. Analysts on average expected earnings of $1.84 a share, according to Thomson Financial.

"A number of factors -- including our active drilling program and development projects in Canada, Egypt, the North Sea and Australia -- point to continued production growth in the second half of 2005," Apache said in a release. Its production grew by 7% in the first half of 2005 to 466,000 barrels of oil equivalent a day, and completed 712 wells, up from 505 wells in the first half of 2004.

Another independent natural gas and oil producer,

Ultra Petroleum

(UPL)

, said its second quarter earnings more than doubled to $47.9 million, or 30 cents a share, while production increased 84% from last year to 17.7 billion cubic feet equivalent. Analysts on average expected earnings of 24 cents a share, according to Thomson First call.

The company said the "production increase included over 500,000 barrels a day from Bohai Bay, China, and over 14 billion cubic feet of natural gas from Wyoming,

and gave us our strongest quarter in Ultra's history."

As for

Weatherford International

(WFT) - Get Report

, the drilling service ptovider said earnings from continuing operations in the second quarter were $94.7 million, or 64 cents a share, compared with 40 cents a share in the year-ago period. The gain was led by a 28% production growth in its Eastern Hemisphere operations. Analysts on average estimated second quarter earnings of 61 cents a share.

Burlington Resources

(BR) - Get Report

reported a fourth consecutive quarterly earnings record, generated by higher commodity prices, growth in production and accelerated share repurchases. The company earned $537 million in the second quarter of 2005, or $1.40 a share, compared with $379, or 96 cents a share, last year. The results were 14 cents ahead of estimates.